Explorers 2012: ASRC Exploration working on Placer

2004 discovery part of 2011 state unit; expansion requested based on seismic, economic need for larger area

Kristen Nelson

Petroleum News

ASRC Exploration LLC, an Arctic Slope Regional Corp. company, is between exploring and producing as a non-operating working interest owner in the Badami field on the east side of the North Slope and the operator at the under-development Placer unit west of the Kuparuk River unit.

ASRC Exploration has recently told the state it believes the best way to develop Placer is in concert with other development under way in the area, which lies between the Kuparuk River and Colville River units on the western side of the North Slope.

Last year ASRC Exploration proposed an 8,769-acre unit at Placer, but the Alaska Department of Natural Resources, Division of Oil and Gas, ultimately approved a much smaller, 1,480-acre unit last September.

ASRC Exploration has now applied to expand the unit, offering seismic evidence of a larger extent of the Kuparuk sands than was recognized last year and asking to defer drilling.

Teresa Imm, vice president of resource development for Arctic Slope Regional, told the division in the Aug. 20 application that “interpretation of the sand indicates that the Kuparuk sand at Placer extends well beyond the current unit boundaries.”

She cited “seismic attributes” indicating the Kuparuk sand is present in each section of the four Placer leases.

“Based on the modeling and analysis of the re-processed seismic data,” the company is requesting that the Placer unit be expanded to include all of the acreage in the four leases: ADLs 391023, 391024, 391027 and 391028. ASRC Exploration owns 100 percent of the working interest in the leases and portions are already committed to the Placer unit under the September 2011 division decision.

The company’s earlier application had included all of the acreage in the leases, but the division only approved a small portion of that acreage.

The Appaloosa connection

Imm told the division the Placer sand “is, at best, only marginally large enough to develop,” so placing a single pad development at the most advantageous location “is critically important.”

She also said the Kuparuk sand at Placer “appears to merge with the BRPC Appaloosa prospect to the south,” referring to a prospect lying between Placer and Mustang.

BRPC, Brooks Range Petroleum Corp., plans to bring its Mustang project into production by 2014, and has said it wants to explore a potential Kuparuk formation extension of Mustang to the northwest called Appaloosa that could add reserves and field life to a Mustang development.

Imm said that because of BRPC’s interest in Appaloosa, it may be prudent to involve BRPC in unit expansion discussions “and in the locating of the delineation well so that the area from Placer to Mustang can be developed in an optimal manner in order to maximize the economic recovery of these thin sands.”

She said ASRC Exploration believes it is in the state’s best interest for ASRC Exploration and BRPC to work together in determining delineation well positions “so that the region from Placer to Mustang can be developed efficiently. The two companies are currently working toward that goal,” Imm said.

ASRC Exploration is also requesting a one-year deferral of the Placer well obligation — currently set for 2013 — to further the company’s evaluation of the Placer unit and to allow it “to work with BRPC on developing the most efficient plan for delineating and developing this area.”

E&P business

Arctic Slope Regional Corp. got into the exploration business in March 2003 when it entered into a “mentoring” agreement with BP Exploration (Alaska), allowing “for sharing data and technical knowledge” between the two companies, including information on unit and near-unit oil and gas investment opportunities.

For ASRC the benefit of the deal was expected to be jobs close to home for shareholders; ASRC is the Native corporation representing the business interests of Inupiat Eskimos on Alaska’s North Slope.

In 2004 ASRC bought into its first prospect — Placer — farming into BP’s acreage and assuming a portion of the cost of the Placer No. 1 well in exchange for a 35 percent working interest.

When Placer was drilled, it was in a Kuparuk River unit expansion area. In addition to Kuparuk operator ConocoPhillips, BP, Unocal, ChevronTexaco and ExxonMobil were partners in the Placer area. The Placer No. 1 well was a requirement of the unit expansion. ConocoPhillips had until 2007 to either relinquish the Placer leases or get them into a participating area and submit a plan of development.

The Placer No. 1 well was suspended; a second well, Placer No. 2, was drilled, but, the state said, the partnership ultimately decided the reservoir discovered in Placer No. 1 was not economic and the leases were dropped.

ASRC Exploration acquired the four Placer-area leases in a 2006 lease sale with a five-year primary term, and subsequently acquired ownership of the Placer No. 1 well bore from ConocoPhillips to maintain the option for testing. The state said in 2011 that ASRC Exploration has also pursued acquiring 3-D seismic over the area.

The division said in its 2011 decision that the Placer No. 1 well “demonstrated that decent quality oil is present in a thin, but high quality reservoir in the Placer area. Additional work and delineation is required to determine if this reservoir has sufficient volume to be commercially viable.”

The division’s 2011 unit decision required reprocessing and reinterpretation of newly licensed seismic data shot across the unit acreage by Dec. 31, 2011, and drilling and logging of an exploratory well or re-entry and testing of the Placer No. 1 by June 30, 2013.

By Dec. 1, 2013, ASRC is required to provide a plan of development for Placer and submit an application for an initial participating area, or submit a second plan of exploration describing plans to drill a unit well by June 30, 2014.

The Badami connection

ASRC is also a working interest owner in a producing unit, Badami.

When BP signed a deal with Savant Alaska to take over Badami in 2008, Savant agreed to bring ASRC Energy Services in as a partner at BP’s request.

All ASRC state oil and gas lease acreage, some 20,000 acres, is now listed under ASRC Exploration.

ASRC also has a pipeline position, owning a share of the Alpine pipeline. As a royalty owner in the Alpine field, ASRC had an option under its leases to purchase a portion of the transportation system.

In 2003, ASRC acquired 16.667 percent of Alpine Transportation Co., which owns the 34-mile, 14-inch pipeline connecting ConocoPhillips’ Alpine field to North Slope pipelines to the east.